Snowflake defended by Citi after Q4, but PT cut on ‘lower near-term numbers’ (NYSE:SNOW)

Snowflake (NYSE:SNOW) shares plunged early Thursday after the data warehousing company posted fourth-quarter results and issued guidance that showed a slowdown in growth, but Citi defended the company, noting the issues seem to be “transitory.”

Analyst Tyler Radke, who has a buy rating, lowered the price target to $310, down from $470, noting that the company, which generates revenue via a consumption model, saw strong bookings, but lower usage near the holidays. The company also issued 2023 revenue guidance that “lacked material upside vs. [Wall Street]” as customer friendly product/platform changes drove better efficiency.”

“We are buyers of the stock down ~22%A/H, given what seems to be a transitory usage issue, with bookings strength persisting and a best-in-class growth profile increasingly distinguished with strong profitability,” Radke wrote in a note to clients.

The analyst also noted that Snowflake’s (SNOW) profitability was a “significant positive,” as the company is already on track to achieve 15% free cash flow margins.

Snowflake (SNOW) shares were down nearly 22% to $207.50 in premarket trading on Thursday.

The Frank Slootman-led Snowflake (SNOW) said it lost 43 cents per share for the period ending January 31, generating $383.8 million in revenue, up 101.5% year-over-year. Analysts were expecting the company to generate a profit of 3 cents per share on $372.9 million in sales.

In addition, Snowflake (SNOW) said performance obligations came in at $2.6 billion, up 99% year-over-year, while net revenue retention was 178% as of January 31.

For the first-quarter, Snowflake said revenue should be between $383 million and $388 million, while full-year product revenue is expected to be between $1.88 billion and $1.9 billion.

The company also announced its intention to acquire Streamlit, a framework to build and simply and accelerate data applications, for a reported $800 million.